February 2, 2012 7:57 pm

Attack of the super-Pacs

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The release of the names behind candidates’ surrogate campaigning groups has put faces to an emerging force in US politics

For a guide to how expensive and bitterly contested November’s US presidential election will be, consider what Mitt Romney and his supporters did to make sure he secured a win in the Florida primary on Tuesday.

In the space of barely a week, the frontrunner for the Republican party nomination and his backers spent more than $15m to buy 13,000 advertising slots, ensuring any Floridian with a television or radio was deluged with claims that Newt Gingrich, his chief rival, was erratic, unstable, untrustworthy, unethical – or worse.

Mr Romney’s campaign did little of the advertising directly. That was left to aggressive new campaigning surrogates known as super-political action committees. Their successful dry run in Florida and earlier Republican primaries is a pointer to the forces that will be unleashed in the months ahead of the presidential election in November.

“Fasten your seat belts – this is going to be one of the most polarising elections of our lifetime,” says Michael Toner, a lawyer and Republican, and a former chairman of the Federal Election Commission. “The primary season is just a warm-up for these guys. Whatever you see in the primaries will be a drop in the bucket compared to the general election.”

Every US election has the potential to change the world but the November poll has much deeper domestic implications, as a historic referendum on the size and scope of government and on President Barack Obama’s demands that the wealthy pay more tax. In a way that the country has not experienced since the era of Richard Nixon, the election process will be driven by an influx of unlimited cash from super-rich Americans and shadowy campaign organisations that can hide their donors.

“We are reliving a history of scandal and corruption that takes us back to Watergate days,” said Fred Wertheimer of Democracy 21, a Washington non-profit organisation that promotes campaign finance reform.

The new campaign landscape was shaped by two court decisions in 2010, which spawned the super-Pacs – campaign organisations that can take unlimited money from corporations, individuals and unions to spend on elections.

Funding disparity: Republicans set the pace

Up to the end of 2011, the super-political action committees set up to support President Barack Obama and Democrats running for Congress had raised $4.4m, writes Richard McGregor. In the space of a single week in January, a super-Pac backing Newt Gingrich in his bid for the Republican presidential nomination raised more than double that.

With the former House of Representatives speaker struggling to stay in the race, the ability of his super-Pac to attract more cash than the sitting president has raised eyebrows in Washington.

Super-Pacs are groups that may spend unlimited amounts to influence elections but may not co-ordinate with their chosen candidate’s campaign

The disparity relates in part to Mr Gingrich’s donors. Last month’s $10m donation came from a single source: casino mogul Sheldon Adelson and his wife, who share Mr Gingrich’s deep commitment to Israel. In addition, Democratic super-Pacs complain that it is hard to raise funds to fight a foe who has yet to be identified.

But the pace of fundraising by the super-Pac backing Mr Obama, Priorities Action USA, has slowed. In the second half of 2011 it raised $1.2m, including $500,000 from the Service Employees International Union and $100,000 from movie director Steven Spielberg. In the first half it received $2m from Jeffrey Katzenberg, chief executive of the DreamWorks Animation studio.

The first problem lies with Mr Obama’s direct fundraising, which overwhelms the super-Pac’s efforts. In 2011 he raised $125m for himself and his party. With a total target of about $800m by November, the drive will intensify, further squeezing the funds available to the super-Pac.

Second, Mr Obama appears to be ambivalent about the group, which hurts any sales pitch to donors by the super-Pac’s co-founders Bill Burton and Sean Sweeney, former White House aides. “I don’t think any of the candidates like these things – he is not alone in that,” says one person familiar with the group’s thinking.

Mr Obama’s presidential campaign might think that spurning big-money donors will help it distance itself ethically from Republican groups. But if it looks as though it is losing ground, that could quickly change.

Mr Burton did not reply to requests for comment but others familiar with the operations of the super-Pac welcomed news this week that money had been flooding into pro-Republican groups. “There might at least be a recognition that we need this because of the embarrassment of riches on the other side,” one person says. “People now know this needs to happen.”

Previously corporate contributions were limited, and the timing of such spending was curtailed around election time. But the Supreme Court ruled that such restrictions breached the constitutional protection of free speech to which corporations were entitled.

The court decisions have amplified an already deep partisan divide in Washington, which has ushered in gridlock on Capitol Hill; resulted in Mr Obama and Republicans abandoning attempts to forge substantive deals in Congress; and left large parts of the world, which look to the US for economic leadership, frustrated onlookers.

Most of the commentary in the wake of Florida has been critical of the super-Pacs, focusing with some outrage on the fact that Mr Romney and his backers ran an almost uniformly negative race in the state. Just one of their adverts was positive: it was in Spanish and aimed at Latino voters, according to Kantar Media, which tracks campaign spending.

But the message that Mr Romney and other political professionals will be taking into the general election is a different one: negative advertising, by banishing Mr Gingrich, worked.

Mr Obama demonstrated the same lesson in 2008, when he far outraised John McCain, the Republican nominee, and hit him with a barrage of attack adverts. This time the tables will be turned: the president can expect the same treatment from opponents who have access to far deeper pockets than they did four years ago.

Mr Obama maintains a formidable campaign machine, and has been furiously fundraising himself. His Chicago-based campaign had pulled in more than $128m by the end of 2011, well ahead of Mr Romney’s $56m, though the margin is narrower once the super-Pacs are taken into account. Conservative super-Pacs might prove still more important in congressional elections, where they will be able to target lawmakers who do not have the resources that Mr Obama possesses to fight back.

The super-Pacs’ donors for 2011 were released on Tuesday, providing the first full accounting of how they had raised their money last year. Harold Simmons, a Texas businessman with interests in chemicals and waste management, and a longtime backer of conservative causes, gave $8.6m to three different super-Pacs in the final quarter of last year. The biggest super-Pac supporting Mr Romney, Restore Our Future, took in $30m, with 10 individuals and companies giving $1m each.

They included big names from the hedge fund industry – Julian Robertson of Tiger Management and Paul Singer of Elliott Management Corporation. Executives from Bain Capital, the buy-out firm co-founded by Mr Romney, gave substantial sums too.

However, the $49m figure does not include the $10m that Las Vegas casino magnate Sheldon Adelson and his wife gave in January to the main pro-Gingrich super-Pac, Winning Our Future, which will be disclosed formally in a few weeks.

Such sums are huge compared with what was permissible under the old regime, and with what the official campaign organisations for presidential candidates may accept. “Washington is not broken; it is bought,” says Buddy Roemer, a former Louisiana governor who is also mounting a bid for the Republican nomination.

For presidential campaigns, an individual can give a maximum of $2,500 to a candidate for the primary season. From the roughly 2,900 donors to presidential super-Pacs in the 2012 election cycle, the average donation is about $33,500, according to an examination of FEC filings by the Center for Public Integrity, a Washington-based non-partisan research organisation.

. . .

Super-Pacs are forbidden from co-ordinating their spending with the candidates’ campaigns but the close personal ties between the two have added an extra level of cynicism about their operations. The super-Pac supporting Mr Romney includes senior members of his 2008 campaign team. The spokesman for the body backing Mr Gingrich is his former press secretary.

Newt Gingrich negative campaigning youtube video grab

Image from a Mitt Romney campaign ad

“You can have your best friend or relative run the super-Pac and you can appear at fundraisers for them, and nothing will happen, because there is no enforcement of the rules [by the FEC],” says Norman Ornstein, of the American Enterprise Institute, a Washington think-tank.

While the Republican adverts on the airwaves so far in this cycle are comparable in number to those run by conservatives in the party’s primaries in 2008, most came from the candidates’ own campaigns. Now, however, the super-Pacs have taken over, with a 1,600 per cent rise in third-party adverts compared with four years ago, according to the Wesleyan Media Project, which tracks adverts.

The rise of these groups underlines another trend: the waning power of the formal Democratic and Republican parties, with money they might once have collected being diverted. “The super-Pacs are bigger than the parties,” says Mr Ornstein.

But rather than spreading power throughout the community, or into smaller political parties, as has happened with the decline of leading political parties in many countries, the super-Pacs could turn once powerful machines into the playthings of their biggest donors – the wealthiest individuals and companies in the country.

Meredith McGehee of the Campaign Legal Center, a Washington-based organisation that scrutinises campaign finance, says that thanks to the courts, the political system is now a “world of unlimited money ... The few rules on the books can be easily circumvented by anyone trying to influence elections, and that is what has happened”.

Others say the 2010 court decisions have put corporations on the same footing as unions, which have long donated large amounts to the Democrats, as well as opening up the game to a wider range of interest groups. “I think the regime allows for more spending, which I think is generally a good thing,” says Brad Smith, a former FEC commissioner and co-founder of the Center for Competitive Politics, a Virginia-based organisation that promotes political free speech. “Added spending helps voters understand the issues and put candidates on a spectrum. It informs voters.”

. . .

The Super-Pacs, on both left and right, have used the system, legally, to keep the identity of some donors secret. The group attached to the country’s largest union grouping, the AFL-CIO, received $2.2m from the federation itself without giving a breakdown of where the money came from. The organisation’s super-Pac also received $500,000 from each of the following unions: the American Federation of Teachers; Unite Here Tip State and Local Fund; and the American Federation of State, County and Municipal Employees.

American Crossroads, a super-Pac co-founded by Karl Rove, former chief political adviser to George W. Bush, Mr Obama’s predecessor, raised $18m last year, including $7m from Mr Simmons and one of his companies, Contran. But Crossroads has a sister organisation, Crossroads GPS, that pulled in $32m in 2011. It shares an office with the super-Pac but, as it was set up as a non-profit organisation under the tax code, it is not required to report its donors.

Mr Wertheimer of Democracy 21 says he believes anger at super-Pacs could usher in an era of reform of political funding after the election.

“Everyone who lives outside of the limits of Washington DC will look at this current system and say it is insane, and they will be correct.”

John Dunbar is a managing editor at the Center for Public Integrity. David Donald and Aaron Mehta of the centre contributed to this report

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